Views not News

But – stop for a while! Let us first make some “definitions” clear. I consider it important.

On the stock exchange there are three types of actors: the Trader (yes, its actually the overall term, but the way it sounds to me is more concrete…), the Speculator and the Investor.

The Trader is involved in short term bets on the fluctuations of prices. He is news-driven, rumors-driven, acting on more or less daily and weekly basis. He is the one concerned about if the company X will report earnings 1 cent below expectations, or Bernanke will mention two vs. three times the word “inflation” in his next statement.

The trader has actually no plan, because the fluctuations on daily and even weekly basis are planless themselves. He has to be quick evaluating the sentiment of the moment, the current trend and take appropriate positions. He is the one going to Wall Street in the morning with the intention to place large number of long buy orders, but one minute after opening recognizes a sell pressure and turns and acts bearish.

The Investor is much of an exact opposite. He does actually not care a lot where the stock prices stand this … month. Even, sometimes, this year. That’s of course more of an abstract, emotional stance as every minute and everywhere the media shows us big headlines and stock-price tickers. Practically no escape … unable not to be told by some screaming reporter how Wall Street has closed today.

But the investor has a very long investing horizon, he has long term positions driven from very fundamental, many-times business-like considerations, and/or the “calm” wish to earn just a decent performance through the years. Rumors and news, Dow Jones one, five, ten per cent down – so what? The Investor is looking for a long term best place for his money. Have he found it, he stays for long. The Investor is looking for the “real” value, which emerges with growing business, with progress and not in the peculiarities of the stock market, of its irrationalities.

And somewhere in the middle, is the field of the Speculator. He is very well aware, that the stock markets are not strictly fundamentally grounded, that there occur great fluctuations and great disparities between economical development and valuation. That the bourse is a place of “fear” and “greed”, more importantly - of plain demand and supply. And due to “her”complex nature in the short term almost fully unpredictable, but in the mid term manageable.

So, I hope I could describe this three characters good enough. If not – I am sure to have often opportunity to add nuances.

As for me, I consider myself speculator.